US Federal Reserve cuts discount rate

DPA Washington, March 17 (DPA) The US central bank has cut its lending rate to banks by a quarter of a percentage point, in a dramatic bid to help financial institutions get cash and bolster an economy hit hard by defaults on home mortgages and a tightening credit market. The Federal Reserve approved the move unanimously in an emergency weekend meeting Sunday, immediately decreasing the so-called discount rate from 3.5 percent to 3.25 percent.

It also announced the creation of a lending facility to make short-term loans to financial institutions.

The new lending organization will make loans beginning Monday and will last for at least six months.

The Fed said the decisions were “designed to bolster market liquidity and promote orderly market functioning. Liquid, well-functioning markets are essential for the promotion of economic growth.”